If goods are not genuine, then product counterfeiting has occurred. If goods have been diverted from their intended channel of commerce by, for example, entering into a country where the goods are prohibited by contract or by law, then the goods have been subject to product diversion.
Product counterfeiting occurs on artworks, CDs, DVDs, computer software recorded on CDs or diskettes, perfumes, designer clothes, handbags, briefcases, automobile and airplane parts, securities (e.g., stock certificates), identification cards (driver's licenses, passports, visas, green cards), credit cards, smart cards, and pharmaceuticals. According to the World Health Organization, more than 7% of the world's pharmaceuticals are bogus. This percentage is higher in some countries, such as Colombia, where up to 40% of all medications are believed to be fake. Until recently, the percentage of bogus medications in the United States has been virtually negligible due to a tightly controlled regulatory system has made it extraordinarily difficult for counterfeiters to sell or distribute suspect medications. However, the recent explosion of Internet drug sales from other countries and increasingly sophisticated counterfeiting techniques have substantially increased the amount of fraudulent drugs entering the United States.
Product diversion has also occurred on many of the aforementioned goods. Such diversion could result in the sale and distribution of goods which do not comply with the product specifications required in the markets they are sold. For example, motorcycles intended to be sold without catalytic converters in a region with lower air pollution standards might be diverted to a region which does require such catalytic converters. Other negative effects include price inequities in certain markets, loss of exclusivity by some manufacturers or distributors, and damage to the goodwill, patent rights, and trademark rights of the manufacturer. Such diverted goods are sometimes referred to as “gray market” goods. Since the goods are genuine, it is sometimes difficult to determine whether the goods have been improperly diverted. This is especially true for a variety of goods such as, for example clothing, pharmaceuticals, and cosmetics.
Labels for authenticating the origin and intended market of a good are known in the prior art. Since the persons who counterfeit or divert goods are also inclined to counterfeit such authenticating labels, label structures incorporating covert, authenticating data have been developed. An example of such a label includes both visible data, such as a printed trademark, a manufacturing serial number, or human readable product information, and invisible information which can authenticate the label as one which originated with or under the authority of the manufacturer. Such labels use an invisible marker material which is incorporated in the label. The data stored in the marker becomes readable when the label is exposed to light of a particular wavelength.